Published 4:00 am, Friday, April 28, 2000

2000-04-28 04:00:00 PDT New York -- A former Wall Street executive was convicted of stock fraud and conspiracy yesterday for leaking confidential financial information about a series of bank deals to a star of X-rated movies.

Federal prosecutors have charged that Gannon passed the information to a New Jersey businessman and that both traded on the inside information, illegally making thousands of dollars in profits.

The New Jersey man, Anthony P. Pomponio, 45, was convicted of conspiracy and fraud yesterday for trading on the inside information. He also was also convicted of lying to Securities and Exchange Commission investigators when questioned about his trades.

Gannon, who uses the stage name Marylin Star, also is charged with insider trading, but she has not appeared for trial. She is a Canadian citizen and is believed to be in Canada. Prosecutors are seeking her extradition.

U.S. Attorney Mary Jo White announced the charges in December in what has been one of the stranger insider-trading cases in recent years. McDermott, 48, was a highly respected expert on bank stocks, and his firm had planned to make its own stock offering. Prosecutors said he had been having an affair with Gannon and charged that he supplied her with the secret information over eight months in 1997 and 1998.

Federal officials said McDermott is the first Wall Street chief executive charged with insider trading. He resigned at his firm's request.

Prosecutors wanted to include Gannon's history as a pornographic film actress and an exotic dancer in the trial. But after defense lawyers objected that the information would not prove the prosecution's case and would be unfair to their clients, Judge Kimba Wood of U.S. District Court in Manhattan ruled that prosecutors could not refer to Gannon's profession. They were allowed to call her only an actress and a dancer.

Although Gannon did not appear during the trial, the jury was shown a photograph similar to a driver's license picture. In pretrial hearings, prosecutors sought to delay the trial to secure her extradition, but experts presented by the defense estimated that it could take more than two years. The prosecution said a typical extradition from Canada would take more than a year.

Prosecutors said Gannon, who had been living in Miami, returned to Canada after receiving a subpoena from the Securities and Exchange Commission. Her lawyers did not respond to a telephone call seeking comment yesterday.

Wood scheduled sentencing for July 17. McDermott and Pomponio each face as much as five years in prison for conspiracy and as much as 10 years for each insider-trading charge.